samosa 22:21 PM - Sep 01 2022

Friday, September 2nd Market Preview

What Happened? - 

  • We gapped down in the morning a few points after the NVDA news in afterhours rocked the market. The selling came in fast and pushed SPY all the way to near 390. This was a critical support for the bulls and it held. 
  • The last moments of the day saw a nice short covering rally as folks appear to be de-risking ahead of Friday's big jobs data. 
  • All eyes now on the 8:30am EST jobs data release on Friday. 

What to Expect on this Week (all times are EST)?

  • Friday - Major Jobs Data at 8:30am - This is the market moving event,

Current Positions and Plays:

  • I swung my SPX calls at 396. Then averaged down at 393 and again under 391. The rally at the end of the day allowed me to turn a profit and enter a small put hedge for tomorrow so I can comfortably hold through the jobs data in the morning. 

What Do I Think?

  • SPY Technicals - We soundly worked out all the oversold technicals on the 30 min and 1 hour charts. The 4 hour chart is just above oversold and daily is neutral. 
  • SPY Fibs for ATH to 2022 low - 407 is the .382 and 390 is the .236. 
  • SPY Fibs for COVID low to ATH - 380 is the .382.
  • SPY broke the 396 level. Looking for consolidation and a possible bounce here or at 393. 

Jobs Data Scenarios - Last Month: 528K, Expectations: 300K

  • Scenario 1:  We come in under the expected 300k number AND wages come in under or flat. The market will test 400 and could rip higher heading into the holiday weekend. Possible 405 test is in the cards. 
  • Scenario 2: We come in over the 300K expectations AND wages come in flat or higher. The market will trend down. I would look for a possible 390 test again. 
  • Scenario 3: Jobs come in over 400K. The market will flush under 390 and this will get ugly fast for the next few weeks. 
  • Scenario 4: Jobs Data comes in at or near expectations. I would expect the market to trend up heading into the holiday weekend and shorts continue to cover to enjoy the holiday weekend profitable. 

THE PLAYS OF THE DAY for FRIDAY for SPY:

  • Scenario 1: Jobs Data Scenario 1 happens. I will look to sell my calls on a 400 break and let my hedge puts go to zero.
  • Scenario 2: Jobs Data Scenario 2 happens. I will hold all my positions and close out my puts near 390. The gains from the puts would cancel the losses from the calls, and I would be able to escape the bad jobs data. 
  • Scenario 3: Jobs Data Scenario 3 happens. I will sell my calls fast and ride those puts. I would also look at entering puts for a few weeks out as well. 
  • Scenario 4: Jobs Data Scenario 4 happens. This would be the worse case scenario. I would most likely hold my calls and sell my puts since their expiration is on Friday. 
  • NOTE: I am turning into a swing trader for various reasons, so please keep that in mind moving forward. My options plays will be always a few weeks out because of this. 
  • This is not financial advice

Levels I am Watching

  • $SPY - levels 390 > 393 > 396 > 400 > 404.40 > 408
  • $QQQ - levels 290 > 293 > 296 > 300 > 302 > 308 > 313
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Comments

Maverick - 1 year ago
I think the scenario could be one you didn't note: Under expectations on the jobs add but wages up.

I'm looking for full Scenario 1 though.
Patrick M - 1 year ago
Nice Preview, Sunil

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Created By: samosa
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